PBoC Reduces Reserve Requirement Ratio for Rural Banks

The People’s Bank of China (PBoC) has announced a reduction in the reserve requirement ratio (RRR) targeting medium and small-sized banks in rural areas as of May 15.

By
NewsChina
Updated Jun.1

The People’s Bank of China (PBoC) has announced a reduction in the reserve requirement ratio (RRR) targeting medium and small-sized banks in rural areas as of May 15.

According to the PBoC’s statement, rural commercial banks and credit cooperatives that only serve the local counties they are located in or whose assets are less than 10 billion yuan (US$1.5b) will implement an 8 percent RRR, lower than half that of the deposits required to be held in reserve by other commercial banks.

The new RRR cut, according to the PBoC, is in response to the State Council’s demand to reduce the financing costs of small- and micro-sized enterprises by setting up a lower deposit reserve system for medium- and small-sized banks. Experts estimate that around 1,000 county-level banks will enjoy the new preferential rate, which will help release about 280 billion yuan (US$40.6b) for loans to private enterprises.

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